Correlation Between Covivio Hotels and Exail Technologies

Can any of the company-specific risk be diversified away by investing in both Covivio Hotels and Exail Technologies at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Covivio Hotels and Exail Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Covivio Hotels and Exail Technologies SA, you can compare the effects of market volatilities on Covivio Hotels and Exail Technologies and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Covivio Hotels with a short position of Exail Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Covivio Hotels and Exail Technologies.

Diversification Opportunities for Covivio Hotels and Exail Technologies

-0.17

Correlation Coefficient

Covivio Hotels  Exail Technologies

Good diversification

The 3 months correlation between Covivio and Exail is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Covivio Hotels and Exail Technologies SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Exail Technologies and Covivio Hotels is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Covivio Hotels are associated (or correlated) with Exail Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Exail Technologies has no effect on the direction of Covivio Hotels i.e., Covivio Hotels and Exail Technologies go up and down completely randomly.

Pair Corralation between Covivio Hotels and Exail Technologies

Assuming the 90 days trading horizon Covivio Hotels is expected to generate 1.12 times more return on investment than Exail Technologies. However, Covivio Hotels is 1.12 times more volatile than Exail Technologies SA. It trades about 0.22 of its potential returns per unit of risk. Exail Technologies SA is currently generating about 0.03 per unit of risk. If you would invest  1,855  in Covivio Hotels on September 28, 2024 and sell it today you would earn a total of  165.00  from holding Covivio Hotels or generate 8.89% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Covivio Hotels  vs.  Exail Technologies SA

Covivio Hotels

Risk-Adjusted Performance

7 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Covivio Hotels are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Covivio Hotels may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Exail Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Exail Technologies SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Exail Technologies is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Covivio Hotels and Exail Technologies

The main advantage of trading using opposite Covivio Hotels and Exail Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Covivio Hotels position performs unexpectedly, Exail Technologies can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Exail Technologies will offset losses from the drop in Exail Technologies' long position.

The idea behind Covivio Hotels and Exail Technologies SA pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.